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Awareness Programme On Commodity Futures as Effective Hedging Tool

536 Days ago

Ranchi, June 22, 2015: With the objective to help the local jewelers and traders understand about the importance of commodity futures market, and benefits of the bullion price risk management tools, Multi Commodity Exchange of India Ltd (MCX), Forward Markets Commission (FMC) and Ranchi Sarrafa Association, today jointly organized an awareness programme at Ranchi (Jharkhand).

This educational program was designed to enhance the knowledge of the market participants and make them familiar with the concept of commodity futures market. There were sessions on Introduction to Commodity Derivatives, Market Fundamentals and Future Outlook of the Bullion Industry, History of Commodity Derivatives Markets, Regulation, Trading and Settlement, and Economic Benefits of Commodity Derivatives, among others.

The experts from MCX explained about how the commodity value chain participants can manage their activities in an environment of unstable and uncertain prices by trading on a commodity exchange such as MCX to reduce their risk exposure. Further, the experts highlighted the role of FMC in regulating and monitoring the functions of commodity exchanges in building confidence of the market participants, and for the growth of Commodities Market in India.

The participants were also briefed about different variants of gold—1 kg to as small as 1gm— and silver— varying from 30 kg to 1 kg—futures contracts with different denominations offered by the exchange, to cater to the needs of varied market participants.

Mr. Ashish Prakash Arya, General Secretary, Ranchi Sarrafa Association said, “In India, where the commodity futures market—which is a meaningful, purposeful and vibrant segment for effective price risk management—had been in a dormant stage for a long time, the interest in this markets has been revived and efforts are being made by FMC and commodity exchanges such as MCX, to promote the futures markets in the country for their wider role in the changing economic environment.”

“Separately, despite its umpteen benefits, hedging is still an under-utilized tool that many market participants are not aware of. I am confident that after attending this educational and insightful programme, the members of our association will definitely use the futures market to manage their bullion price risks”, he further stated.